Google Pulls VoiceMail App in Possible In-App Payment Move

UPDATED: In a move that could signal Google is taking a hard line on in-app payments similar to the way Apple has outlined new subscription rules, Google has pulled the popular Visual VoiceMail app from Android Market, citing a violation of the developer payment rules. The details of the violation aren’t completely clear, but the developer believes the app, which has had one million downloads on Android, was targeted for not processing in-app payments through Google Checkout.

Google notified developer PhoneFusion Tuesday night, saying it was pulling their free voicemail app after more than two years on the market for a violation of the Developer Content Policy. When Fort Lauderdale, Fla.-based PhoneFusion followed up, the Android Team said in an e-mail that the developer violated section 3.3 of the Android Market Developer Distribution Agreement, covering pricing and payments. In the section, it reads:

…If you want to collect fees after the free trial expires, you must collect all fees for the full version of the Product through the Payment Processor on the Market. In this Agreement, “free” means there are no charges or fees of any kind for use of the Product. All fees received by Developers for Products distributed via the Market must be processed by the Market’s Payment Processor.

Jonathan Hollander, EVP of PhoneFusion, said Google never made clear what the violation was, and the app has not undergone any major changes recently except a bug fix a couple of weeks ago. He believes Google is forcing them to use Google Checkout for in-app payments. It’s unclear when the language in section 3.3 began requiring payments through the “Payment Processor.” Visual VoiceMail is a free app, but it makes money using premium features like voicemail transcription, ad-free service and the ability to receive faxes through a dedicated number. PhoneFusion runs those extra purchases through its own website similar to how Amazon links to its own site for Kindle purchases. Hollander said the move by Google is reminiscent of Apple’s new stance on subscriptions, which forces developers and publishers to use Apple’s in-app purchase system and prohibits them from linking to websites for outside payments.

“It looks like they’re pulling an Apple but just for us,” said Hollander. “There was no warning that they’re going to enforce this, which make it worse than Apple. Even if you disagree with Apple, they gave until June to remove their apps. Here, there’s no choice.”

Now it’s unclear if in-app payments are the reason why the Visual VoiceMail app was pulled. I reached out to Google last night, and they said they are working on getting back to me. I will update when I hear more. But this could have big implications for Android developers if indeed Hollander is correct. It would signal that Google is interested in channeling all payments through its recently announced in-app payment system, closing off other options in the same way Apple is doing.

As I’ve written before on GigaOM Pro (subscription required) it’s a lucrative move for a platform maker to take a cut of every in-app purchase. Google announced in-app payments earlier this month, but said it would be implemented by the end of the first quarter. It’s unclear if the system is in place, but this enforcement could foreshadow how Google will operate with respect to Android developers who offer in-app payments. It may be a requirement of developers instead of just an option.

Curiously, it doesn’t appear that other apps with in-app purchase have been pulled in the same way as Visual VoiceMail. Hollander said the decision to remove the app, which Google affirmed in an e-mail last night, smacks of punishment aimed specifically at PhoneFusion. He said Google has not offered the company any way to remedy the problem other than uploading a new application. The Android Team said because of auditing purposes, it can’t reinstate apps that have been cited for violations. That forces the developer to rename the app and lose all ratings and comments that users have given the app.

“The bottom line is, they said it doesn’t matter what the situation is; the only thing we can do is upload again,” said Jonathan Hollander, EVP of PhoneFusion. “We lose 20,000 comments and all the 5-star ratings and the name Visual VoiceMail; we lose everything. This is absolutely vindictive, that’s insane.”

Hollander wonders if PhoneFusion is being singled out because it competes with Google’s Android voicemail system and with Google Voice. The company also sells Phone FusionOne, a white label service for companies running VoIP to be able to offer Google Voice-like features. Hollander said the company is about to announce some big partnerships for Phone FusionOne in the coming months. The developer has also recently complained of poor mobile ad fill rates around 70 percent over the last two months, far below the 99 percent rate the app used to see before AdMob was bought by Google. Hollander said those complaints, all routed through e-mail, have also fell largely on deaf ears.

Whatever the case, this has serious implications. It could be the first sign Google is going to be aggressive in the way it pushes developers on its in-app payments system. That would force developers to have to fork out more to Google and lose some of their margins. Hollander said he pays credit card companies about 3-4 percent to process payments, but will have to pay 10 percent of payments to Google for using Google Checkout.

But if it’s a problem tied to competition with PhoneFusion, that’s also troubling. Google has touted its openness, but some are increasingly questioning how open Google will be as it looks to compete more and more in mobile. Skyhook, for example, has filed a lawsuit against Google for allegedly forcing some manufacturers to stop using its location technology in favor of Google’s own solution. The PhoneFusion situation could mean other apps that duplicate Google’s current or future services could be affected if the company is more aggressive in taking on competitors.

Now, this could be all be a misunderstanding or PhoneFusion could have violated the developer rules in a more serious way than it imagined. But at the very least, it seems like shabby treatment for a longtime Android developer. PhoneFusion has helped attract users to the Android Market and was highlighted on the Android Market website at one point a couple of years ago. But for the developer to get no warning and not be able to fix their app and resubmit the original app seems extreme. Hollander said it’s also been very tough getting any word out of Google, though he admits other developers have that problem too.

Now as the platform owner, it’s not unexpected for Google to flex its muscles. Mobile is the company’s announced priority for this year and making more money from Android is certainly to be expected. But if PhoneFusion’s accusations prove true, it will show that Google could be taking a much stronger approach to its platform than previously thought. Android might not end up being as open as Google has preached. But it could be more profitable for Google in the end and potentially a little less friendly for developers and others in the ecosystem. We’ll have to see if this case is a glimpse of that or just an isolated event.

UPDATE: Google got back to me and shared a short statement: “We remove applications from Android Market that violate our terms of service.” A spokesman directed me to the Android Market Developer Distribution Agreement and Android Market Developer Program Policies. It’s unclear exactly what the problem is because Google has not officially said why it pulled the Visual VoiceMail app. It’s possible that the app may have been cited for offering an ad-free version on the web. In essence, it might have run afoul of the same non-compete clause that apparently got the Kongregate Arcade app pulled when it first went on sale in Android Market because it appeared to be too close to an app serving as an app store. If that’s the case, it could be another sign that Google is not going to tolerate apps that serve as competition for Android Market. I’ll update more as I get information.